HR Startup Monitor 2022: Tech startups in the DACH region
Market consolidation leads to increasing number of M&A transactions in HR tech environment
On the wave of the general tech hype in recent years, HR tech companies were able to achieve spectacular company valuations. But how has the industry evolved since the market environment became overcast with the start of the Ukraine war?
As part of the HR Startup Monitor 2022, published in the Personalmagazin issue 11/2022, Dr. Simon Werther, Professor of Leadership at the University of Applied Sciences Munich and founder of the HR startup HRInstruments, and Quantum Partners jointly investigated the M&A activity for HR tech startups in the DACH region.
HR startups: Favorable market environment for a company sale
The analysis based on the startups identified in the Monitor shows a significant increase in transaction volume since 2019. While growth capital financing naturally accounts for most transactions, the share of majority acquisitions by strategic buyers or financial investors has grown steadily in recent years.
The reasons for this development are complex: On the one hand, large HR tech players were able to secure significant capital at attractive valuations in the course of the tech boom of recent years and are now using their dry powder for strategic acquisitions. At the same time, more and more companies are reaching a level of maturity that puts them in the focus of financial investors – whether as individual investments or add-ons as part of a buy-and-build strategy. Last but not least, since the Ukraine war and the subsequent significant correction for tech stocks on the capital market, start-ups are finding it more difficult to attract venture capital and are thus becoming M&A targets, which is further fuelling the market consolidation trend.
A development that was confirmed in Q3 2022 – after the article was published. Read the full article here (in German):
About Quantum Partners
Quantum Partners GmbH, headquartered in Munich, is a specialized corporate finance advisor that supports clients in company transactions as well as in finding financing.